Suppliers fear chargebacks if ports shut down

Wednesday, September 05, 2012

Groups representing companies in the apparel and luggage industry are calling on the International Longshoremen's Association (ILA) and their employers to resume labor negotiations, noting their members could face chargebacks from retailers .
Talks on a contract to replace one that expires at the end of this month ended abruptly two weeks ago.
In a letter sent Tuesday to Harold J. Daggett, president of the ILA, and James A. Capo, chairman and chief executive of USMX, they say there is a "pressing need for products to arrive on time at their destinations to prevent costly chargebacks from retailers while simultaneously fulfilling customer demand.
"This need for certainty and reliability becomes even more important during the months preceding the holiday season, when all levels of the supply chain increase production in anticipation of the busiest shopping period of the year," said the letter signed by Kevin Burke, president and CEO of the American Apparel & Footwear Association (AAFA); Sara Mayes, president of both the Gemini Shippers Association and Fashion Accessories Shippers Association (FASA); and Michele Marini Pittenger, president of the Travel Goods Association (TGA).
The trade groups worry that with the looming ILA master contract's end date of Sept. 30, and stalled negotiations with dock management that a strike on the U.S. East and Gulf coasts is increasingly a possibility.
"Retailers and importers are already considering contingency plans that will take their products through more reliable ports, including those in Canada, or through entirely different transportation media altogether," they said. "Given the long-term planning necessary for oceanic transportation, many importers who are now booking cargo for East Coast bound ports would very likely become tangled in any potential work stoppage. As a result, many companies are already contemplating expensive alternatives that will incur multiplied transportation costs and divert business away from the East and Gulf coast ports."
While the groups said they understand the complexity of the negotiations, they warned that a "stoppage would cause severe and long-lasting effects for all parties involved as shipments are diverted and retailers and importers scramble for new reliable ways to get their products on the market in time to capture the peak of consumer spending during the holiday season.
"In addition to causing extreme losses of port business and huge expenses for many levels of the supply chain, the need for unwanted cargo diversions and the existence of full-on work stoppages, if they were to occur, would have dire consequences for the already-struggling U.S. economy and the consumer population as a whole," the trade groups said. - Chris Dupin